What do you think?
Rate this book
The Death of Human Capital?: Its Failed Promise and How to Renew It in an Age of Disruption
Human capital theory, or the notion that there is a direct relationship between educational investment and individual and national prosperity, has dominated public policy on education and labor for the past fifty years. In The Death of Human Capital?, Phillip Brown, Hugh Lauder, and Sin Yi Cheung argue that the human capital story is one of false investing in learning isn't the road to higher earnings and national prosperity. Rather than abandoning human capital theory, however, the authors redefine human capital in an age of smart machines. They present a new human capital theory that rejects the view that automation and AI will result in the end of waged work, but see the fundamental problem as a lack of quality jobs offering interesting, worthwhile, and rewarding opportunities. A controversial challenge to the reigning ideology, The Death of Human Capital? connects with a growing sense that capitalism is in crisis, felt by students and the wider workforce, shows what's at stake in the new human capital while offering hope for the future.
320 pages, Kindle Edition
Published September 24, 2020
6 people are currently reading
111 people want to read
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 5 of 5 reviews
June 15, 2023
This review is going to be mostly a series of quotes from the book. In many ways this book is an updated version of an earlier book by the same authors called The Global Auction: The Broken Promise of Education, Jobs and Incomes. It is on much the same theme a decade later, but this time makes ‘Human Capital Theory’ the central theme and why we need to move towards a new version of this theory.
It shows that the link between ‘earning and learning’ – as much as it has a nice rhyming jingle-jangle to it – has essentially collapsed. They show that ‘the knowledge economy’ has been captured by a kind of aristocracy who have such a head start in the race that they can either wait out everyone else until they are forced out of the education game, or they are able to use their considerable resources to attend the best universities, have the best tutors, acquire the best extra-curricular experiences and on and on. As such, they turn financial advantage into forms of cultural merit, that then makes them look like they won the race on the basis of their own abilities, whereas it was really just a matter of money conquering all things.
Conventional human capital theory is based on the idea that the more highly educated a society is, the more productive it will be and the better off everyone will be. The central dogma of this theory is that education creates better jobs and it reduces the distinctions between groups, since what matters is your productivity, and this is decided by your level of education. This is a ‘supply side’ theory, since there is meant to always be a demand for highly educated people, given their productive advantage.
This theory does not match the evidence. We have the most highly educated generation ever, but wealth inequality is growing at alarming rates. Many highly educated people are simply unable to find work. The authors say there isn’t a skills shortage, but rather a jobs shortage – and it is that side of the equation that must be addressed.
This is a fascinating book. I can’t recommend it too highly. I also recommend their previous book too. I’ve recommended it to so many people I can hardly begin to tell you. This is not a book saying that education is not worthwhile – but it is saying that we need to rethink education and jobs – recognising that we don’t have a skills shortage, but a jobs shortage – and that governments need to intervene to address that shortage, since the point of capitalism is to literally create that shortage.
You can do everything right, live up to all of the demands placed upon you, and still be left behind. A recent article I read said that if everyone working in a job requiring a science degree were to die tomorrow in Australia, there are enough people currently studying science at university to replace them all. STEM does not make you safe, no learning does. These problems are social, not educational - and education on its own cannot solve them.
Some Quotes - I read this as an ebook, so no page numbers.
“It is estimated that close to a third of Americans are involved in education as students, teachers, college professors, or trainers.”
“Many college-educated students have discovered that learning doesn’t equal earning.”
“Opting out of college is not much of an alternative, as some four-year college students now do the jobs once marked out for high school graduates, pushing those without a college education into precarious (un)employment.”
“The new human capital is based on the idea of job scarcity as distinct from labor scarcity.”
“We reject the view that new technologies invariably increase the demand for higher-level skills, or that the supply of more educated workers will energize employers to invest in new ways of exploiting their talents.”
“Given the uncertainties of investing in education, seeing human capital as a private good is flawed and cannot address the acute problems that most students and workers now face.”
“Our new analysis of rates of return to education in America and Britain over a forty-year period challenges the central claims that learning equals earning and that technological change has led to a rise in the wages of highly skilled workers.”
“The rise of neoliberalism transformed the policy significance of orthodox human capital theory. The idea of education as an investment became the cornerstone of supply-side economic policy. By investing in themselves individuals were free to compete in a market-based skills competition that would reward them according to their individual marginal productivity.”
“Students and workers are to stand naked in the market, save for their credentials.”
“Now a nation’s human capital stock is judged by performance in benchmark tests compiled in international league tables. For these league tables to be comparable, a standardized measure of performance is required by which students, schools, and nations can be judged. In other words, these league tables are being used to define educational excellence.”
“The message for community college graduates (those with up to three years of college education) is even starker, as those in the bottom decile have an earnings profile much closer to that of their counterparts with a high school diploma”
“One of the key features of conventional thought about advanced capitalist economies is that they are distinguished by rising demand for a highly skilled workforce, which in turn has resulted in an increase in managerial and professional occupations and a decline in the demand for manual and unskilled work. But this account is not supported by research evidence showing the median earnings of graduates has not tracked the rise in technical, managerial, and professional employment.”
“In other words, it has more to do with the character of employment than the character or skills of workers.”
“Given the cost of time and training, it would appear that the within-occupation earnings gap is greater than the one between occupations, as anticipated by orthodox theory.”
“In contrast to the prediction of orthodox theorists, income inequality has not been alleviated with the expansion of higher education. In fact the opposite is true: the forty-year period 1970 to 2010 saw the sharpest rise in income inequality in both the United States and the United Kingdom.”
“A third tenet of orthodox theory is that the distribution of opportunities and rewards becomes more meritocratic over time. In other words, any differences between winners and losers should reflect differences in human capital investment, ability, and performance: people get what they deserve. However, in the past forty years the United States has been characterized by persistent and unmerited inequalities.”
“Figures from the US Bureau of Labor Statistics also show that the labor share of total economic output declined rapidly, from 66 percent in 1947 to as low as 56 percent in 2011, rising slightly to 58.4 percent in 2016.”
“The evidence suggests that in many countries, including the United States and Britain, significant proportions of college graduates are doing subgraduate work. Jaison Abel and Richard Deitz found that 44 percent of college graduates between the ages of twenty-two and twenty-seven who entered the American labor market between 2011 and 2014 were underemployed. These findings, they suggest, are consistent with the thesis that there has been a reversal in the demand for cognitive skills since 2000.”
“Women’s success in higher education has not been mirrored by rates of return similar to those enjoyed by men. Instead women with the same qualification earn markedly less.”
“Not only have they made far less than high school leavers in the top decile, but the racial gap in earnings is profound and has increased over time.”
“Our evidence directly challenges the alleged linear relationship between productivity and labor income. Women and racial minorities’ invested human capital yields far lower returns in the labor market, where non-Hispanic white men are the consistent winners.”
“Contrary to orthodox theory’s prediction of universal uniform returns to the same amount of investment, spending more years in college has not yielded proportional economic returns for the majority in the labor market.”
“Many people are being priced out of the market not because they are stupid or lack ambition but because they do not have the resources to stay in an extended competition; at the same time, elites are using their social advantage to win a competitive advantage by monopolizing elite institutions and accessing international networks.”
“Skills and their relationship to each other are culturally specific competences. The manner of their transmission and acquisition socializes the child into their contextual usages. Thus, the unit of analysis cannot simply be an abstracted specific competence like reading, writing, counting but the structure of social relationships which produces these specialized competences.”
“This discussion contributes to a key argument in the book: that the world is creating vast numbers of qualified people for which there are not enough good jobs in today’s global economy.”
“It is this perpetual commotion in doing “more with less” that highlights the analytical limitation of the orthodox approach, as “the problem that is usually being visualized is how capitalism administers existing structures, whereas the relevant problem is how it creates and destroys them.”
“Amartya Sen, another Nobel Prize–winning economist, also rejects the marginal productivity view of how wages are determined. The “alleged fact” of wages reflecting marginal productivity, says Sen, is “a fiction, and while it might appear to be a convenient fiction, it is more convenient for some than for others.”
“When market power becomes a key source of income, rent-seeking behavior becomes inevitable. Joseph Stiglitz has extended this argument to claim that America has become a rent-seeking society, as elites use political and economic power to get a larger share of the national pie rather than grow the national pie.”
“Many middle- and working-class families that have taken out loans to fund their educational and career aspirations have been left frustrated: the promise that an investment in education will result in good, well-paid jobs has not been fulfilled.”
“Knowledge, understanding, and creativity take second place to the much narrower imperatives of getting students through tests.”
“Nevertheless there have been numerous attempts to specify the skills that will be required in the context of rapid technological change and international competition. These typically highlight science, technology, engineering, and math, along with a focus on flexibility, adaptability, problem-solving, and life skills, in recognition of rapid changes in the workplace.”
“But the education we are advocating is for life, not just for paid work.”
“Class differences in educational performance and major inequalities in translating educational achievements into jobs point to differences in market power that cannot be explained or addressed solely in terms of investments in education and training.”
“The expansion of higher education has not been matched by a commensurate rise in the demand for skilled occupations, although the extent of this mismatch varies from country to country. This requires an understanding of job scarcity and the problems it poses to individuals seeking to capitalize on their knowledge and skill.”
“Manufacturing production in China has increased by 70 percent since 1996, but the workforce has declined by 25 percent, which means there are 30 million fewer Chinese workers in manufacturing.”
“In 2015 Facebook had 1.35 billion users but only 9,199 employees and was valued at one quarter of a trillion dollars; Twitter had 288 million users and 3,638 employees; and Apple had a relatively large direct workforce of 56,000 employees. But when compared with the corporate giants of the past, these are small numbers; for example, in 1982 Exxon had 173,000 workers, although by 2012 this had declined to 77,000. Many of today’s leading firms are making large profits with a small direct workforce, while offshoring non-core business to take advantage of international labor arbitrage.”
“over 50 million job openings the US Bureau of Labor Statistics predicts between 2012 and 2022. Of these, more than two-thirds (67 percent) will come from replacement needs as existing workers shift jobs or retire, rather than new jobs resulting from technological innovation and economic growth. And two-thirds (65 percent) of all job openings in 2020 require no more than a high school diploma—the same proportion as the two-thirds (105 million) of American workers in the overall economy who do not require a college education.”
“Unmoved by concerns about their exploitation of this social dividend, the fifty largest US companies had until recently $1.4 trillion in offshore tax havens, close to the GDP of Canada and more than the GDP of Russia or Mexico. Although corporate tax cuts offered by the Trump Administration has resulted in the repatriation of some of this money. Moreover, despite making $4 trillion in profits between 2008 and 2014, for every dollar these companies paid in corporate taxes they received $27 in federal loans, loan guarantees, and bailouts.”
“The hidden injuries of class have become the open wounds of economic conflict in the latest stage of capitalist development. But despite moral outrage, the sharp end of the conflict over capital is evident in the rise in mental illness, stress levels, homelessness, and dependency on food banks, which are the visible and hidden injuries within the middle as well as working classes.”
“This is why we have drawn a distinction between a banking model of education and an individual growth model of lifelong learning. We have also argued for a new human capital index that includes the extent to which nations meet learning and earning thresholds across the life course.”
It shows that the link between ‘earning and learning’ – as much as it has a nice rhyming jingle-jangle to it – has essentially collapsed. They show that ‘the knowledge economy’ has been captured by a kind of aristocracy who have such a head start in the race that they can either wait out everyone else until they are forced out of the education game, or they are able to use their considerable resources to attend the best universities, have the best tutors, acquire the best extra-curricular experiences and on and on. As such, they turn financial advantage into forms of cultural merit, that then makes them look like they won the race on the basis of their own abilities, whereas it was really just a matter of money conquering all things.
Conventional human capital theory is based on the idea that the more highly educated a society is, the more productive it will be and the better off everyone will be. The central dogma of this theory is that education creates better jobs and it reduces the distinctions between groups, since what matters is your productivity, and this is decided by your level of education. This is a ‘supply side’ theory, since there is meant to always be a demand for highly educated people, given their productive advantage.
This theory does not match the evidence. We have the most highly educated generation ever, but wealth inequality is growing at alarming rates. Many highly educated people are simply unable to find work. The authors say there isn’t a skills shortage, but rather a jobs shortage – and it is that side of the equation that must be addressed.
This is a fascinating book. I can’t recommend it too highly. I also recommend their previous book too. I’ve recommended it to so many people I can hardly begin to tell you. This is not a book saying that education is not worthwhile – but it is saying that we need to rethink education and jobs – recognising that we don’t have a skills shortage, but a jobs shortage – and that governments need to intervene to address that shortage, since the point of capitalism is to literally create that shortage.
You can do everything right, live up to all of the demands placed upon you, and still be left behind. A recent article I read said that if everyone working in a job requiring a science degree were to die tomorrow in Australia, there are enough people currently studying science at university to replace them all. STEM does not make you safe, no learning does. These problems are social, not educational - and education on its own cannot solve them.
Some Quotes - I read this as an ebook, so no page numbers.
“It is estimated that close to a third of Americans are involved in education as students, teachers, college professors, or trainers.”
“Many college-educated students have discovered that learning doesn’t equal earning.”
“Opting out of college is not much of an alternative, as some four-year college students now do the jobs once marked out for high school graduates, pushing those without a college education into precarious (un)employment.”
“The new human capital is based on the idea of job scarcity as distinct from labor scarcity.”
“We reject the view that new technologies invariably increase the demand for higher-level skills, or that the supply of more educated workers will energize employers to invest in new ways of exploiting their talents.”
“Given the uncertainties of investing in education, seeing human capital as a private good is flawed and cannot address the acute problems that most students and workers now face.”
“Our new analysis of rates of return to education in America and Britain over a forty-year period challenges the central claims that learning equals earning and that technological change has led to a rise in the wages of highly skilled workers.”
“The rise of neoliberalism transformed the policy significance of orthodox human capital theory. The idea of education as an investment became the cornerstone of supply-side economic policy. By investing in themselves individuals were free to compete in a market-based skills competition that would reward them according to their individual marginal productivity.”
“Students and workers are to stand naked in the market, save for their credentials.”
“Now a nation’s human capital stock is judged by performance in benchmark tests compiled in international league tables. For these league tables to be comparable, a standardized measure of performance is required by which students, schools, and nations can be judged. In other words, these league tables are being used to define educational excellence.”
“The message for community college graduates (those with up to three years of college education) is even starker, as those in the bottom decile have an earnings profile much closer to that of their counterparts with a high school diploma”
“One of the key features of conventional thought about advanced capitalist economies is that they are distinguished by rising demand for a highly skilled workforce, which in turn has resulted in an increase in managerial and professional occupations and a decline in the demand for manual and unskilled work. But this account is not supported by research evidence showing the median earnings of graduates has not tracked the rise in technical, managerial, and professional employment.”
“In other words, it has more to do with the character of employment than the character or skills of workers.”
“Given the cost of time and training, it would appear that the within-occupation earnings gap is greater than the one between occupations, as anticipated by orthodox theory.”
“In contrast to the prediction of orthodox theorists, income inequality has not been alleviated with the expansion of higher education. In fact the opposite is true: the forty-year period 1970 to 2010 saw the sharpest rise in income inequality in both the United States and the United Kingdom.”
“A third tenet of orthodox theory is that the distribution of opportunities and rewards becomes more meritocratic over time. In other words, any differences between winners and losers should reflect differences in human capital investment, ability, and performance: people get what they deserve. However, in the past forty years the United States has been characterized by persistent and unmerited inequalities.”
“Figures from the US Bureau of Labor Statistics also show that the labor share of total economic output declined rapidly, from 66 percent in 1947 to as low as 56 percent in 2011, rising slightly to 58.4 percent in 2016.”
“The evidence suggests that in many countries, including the United States and Britain, significant proportions of college graduates are doing subgraduate work. Jaison Abel and Richard Deitz found that 44 percent of college graduates between the ages of twenty-two and twenty-seven who entered the American labor market between 2011 and 2014 were underemployed. These findings, they suggest, are consistent with the thesis that there has been a reversal in the demand for cognitive skills since 2000.”
“Women’s success in higher education has not been mirrored by rates of return similar to those enjoyed by men. Instead women with the same qualification earn markedly less.”
“Not only have they made far less than high school leavers in the top decile, but the racial gap in earnings is profound and has increased over time.”
“Our evidence directly challenges the alleged linear relationship between productivity and labor income. Women and racial minorities’ invested human capital yields far lower returns in the labor market, where non-Hispanic white men are the consistent winners.”
“Contrary to orthodox theory’s prediction of universal uniform returns to the same amount of investment, spending more years in college has not yielded proportional economic returns for the majority in the labor market.”
“Many people are being priced out of the market not because they are stupid or lack ambition but because they do not have the resources to stay in an extended competition; at the same time, elites are using their social advantage to win a competitive advantage by monopolizing elite institutions and accessing international networks.”
“Skills and their relationship to each other are culturally specific competences. The manner of their transmission and acquisition socializes the child into their contextual usages. Thus, the unit of analysis cannot simply be an abstracted specific competence like reading, writing, counting but the structure of social relationships which produces these specialized competences.”
“This discussion contributes to a key argument in the book: that the world is creating vast numbers of qualified people for which there are not enough good jobs in today’s global economy.”
“It is this perpetual commotion in doing “more with less” that highlights the analytical limitation of the orthodox approach, as “the problem that is usually being visualized is how capitalism administers existing structures, whereas the relevant problem is how it creates and destroys them.”
“Amartya Sen, another Nobel Prize–winning economist, also rejects the marginal productivity view of how wages are determined. The “alleged fact” of wages reflecting marginal productivity, says Sen, is “a fiction, and while it might appear to be a convenient fiction, it is more convenient for some than for others.”
“When market power becomes a key source of income, rent-seeking behavior becomes inevitable. Joseph Stiglitz has extended this argument to claim that America has become a rent-seeking society, as elites use political and economic power to get a larger share of the national pie rather than grow the national pie.”
“Many middle- and working-class families that have taken out loans to fund their educational and career aspirations have been left frustrated: the promise that an investment in education will result in good, well-paid jobs has not been fulfilled.”
“Knowledge, understanding, and creativity take second place to the much narrower imperatives of getting students through tests.”
“Nevertheless there have been numerous attempts to specify the skills that will be required in the context of rapid technological change and international competition. These typically highlight science, technology, engineering, and math, along with a focus on flexibility, adaptability, problem-solving, and life skills, in recognition of rapid changes in the workplace.”
“But the education we are advocating is for life, not just for paid work.”
“Class differences in educational performance and major inequalities in translating educational achievements into jobs point to differences in market power that cannot be explained or addressed solely in terms of investments in education and training.”
“The expansion of higher education has not been matched by a commensurate rise in the demand for skilled occupations, although the extent of this mismatch varies from country to country. This requires an understanding of job scarcity and the problems it poses to individuals seeking to capitalize on their knowledge and skill.”
“Manufacturing production in China has increased by 70 percent since 1996, but the workforce has declined by 25 percent, which means there are 30 million fewer Chinese workers in manufacturing.”
“In 2015 Facebook had 1.35 billion users but only 9,199 employees and was valued at one quarter of a trillion dollars; Twitter had 288 million users and 3,638 employees; and Apple had a relatively large direct workforce of 56,000 employees. But when compared with the corporate giants of the past, these are small numbers; for example, in 1982 Exxon had 173,000 workers, although by 2012 this had declined to 77,000. Many of today’s leading firms are making large profits with a small direct workforce, while offshoring non-core business to take advantage of international labor arbitrage.”
“over 50 million job openings the US Bureau of Labor Statistics predicts between 2012 and 2022. Of these, more than two-thirds (67 percent) will come from replacement needs as existing workers shift jobs or retire, rather than new jobs resulting from technological innovation and economic growth. And two-thirds (65 percent) of all job openings in 2020 require no more than a high school diploma—the same proportion as the two-thirds (105 million) of American workers in the overall economy who do not require a college education.”
“Unmoved by concerns about their exploitation of this social dividend, the fifty largest US companies had until recently $1.4 trillion in offshore tax havens, close to the GDP of Canada and more than the GDP of Russia or Mexico. Although corporate tax cuts offered by the Trump Administration has resulted in the repatriation of some of this money. Moreover, despite making $4 trillion in profits between 2008 and 2014, for every dollar these companies paid in corporate taxes they received $27 in federal loans, loan guarantees, and bailouts.”
“The hidden injuries of class have become the open wounds of economic conflict in the latest stage of capitalist development. But despite moral outrage, the sharp end of the conflict over capital is evident in the rise in mental illness, stress levels, homelessness, and dependency on food banks, which are the visible and hidden injuries within the middle as well as working classes.”
“This is why we have drawn a distinction between a banking model of education and an individual growth model of lifelong learning. We have also argued for a new human capital index that includes the extent to which nations meet learning and earning thresholds across the life course.”
November 19, 2020
"The Death of Human Capital?" is a great book if you are interested in all the arguments (well, at least one hundred of them) against "human capital theory" (HCT) -- a hugely successful but tragically damaging theory that took control of economists in the early 1960s, and subsequently drove them to utter madness.
Where the book fails to deliver is its attempt to "rehabilitate" HCT for these Covid-ridden days. There is no saving such madness, and, in fact, its demise threatens the very discipline that spawned it to begin with.
The book also comes up short in terms of EXPLAINING the success and power of human capital theory -- at least if you are interested in how new intellectual movements succeed and transition to public policy, and even global monetary policy, as with the World Bank's embrace of human capital theory as the preferred means for economic development in the third world. The discussion about the rise of HCT presents some context, but not enough about the "opportunity space" within economics that allowed this catastrophe in the first place.
And, now, with King Covid-19 reigning, human capital theory is finally being dumped on the ash heap of economic theory. Not a moment too soon. This book will help. The only thing left to do is count the corpses and the walking dead that still live and breath this zombie theory.
Glen McGhee, Dir.
Florida Higher Education Accountability Project
Where the book fails to deliver is its attempt to "rehabilitate" HCT for these Covid-ridden days. There is no saving such madness, and, in fact, its demise threatens the very discipline that spawned it to begin with.
The book also comes up short in terms of EXPLAINING the success and power of human capital theory -- at least if you are interested in how new intellectual movements succeed and transition to public policy, and even global monetary policy, as with the World Bank's embrace of human capital theory as the preferred means for economic development in the third world. The discussion about the rise of HCT presents some context, but not enough about the "opportunity space" within economics that allowed this catastrophe in the first place.
And, now, with King Covid-19 reigning, human capital theory is finally being dumped on the ash heap of economic theory. Not a moment too soon. This book will help. The only thing left to do is count the corpses and the walking dead that still live and breath this zombie theory.
Glen McGhee, Dir.
Florida Higher Education Accountability Project
June 25, 2023
Basically the world is changing the old paradigm orthodox view on education that education makes you rich is no longer compatible, this book argue on the myth age of human capital. This is a very good, if somebody ask you that how Master Degree will give benefit to the employee, the answer is that question is based on the assumption of Orthodox theory of education. Post-graduate education is sacrifice that made by people that want advancement.
1.Learning is not earnings
The relationship between individuals, education, and employment in an era of twentieth-century industrialism is no longer appropriate in an age of machine intelligence
2.Too much people working in education sectors.
3.Social class, race and gender play significant roles.
4.Credential Inflation: Devaluing Credentials as a Currency of Opportunity
5.Job Scarcity is not Labor Scarcity
6.Myth of the Self-Made Individual
7.Education is complex problem.
1.Learning is not earnings
The relationship between individuals, education, and employment in an era of twentieth-century industrialism is no longer appropriate in an age of machine intelligence
2.Too much people working in education sectors.
3.Social class, race and gender play significant roles.
4.Credential Inflation: Devaluing Credentials as a Currency of Opportunity
5.Job Scarcity is not Labor Scarcity
6.Myth of the Self-Made Individual
7.Education is complex problem.
November 21, 2022
A good, interesting read that traces the rise of human capital theory, its current use by neoliberalism and a decent criticism
The book offers an alternative of "new" human capital that attempts to offer a more dynamic definition that doesn't reduce humans to capital and doesn't set the goal of higher wages and greater social mobility as the end goal, however I felt the alternative isn't clearly defined and the authors' new definition seemed to be a broader form of human capital, rather than anything radically different
I also thought the book was lacking with regards to the sorting and signalling hypothesis of education
The book offers an alternative of "new" human capital that attempts to offer a more dynamic definition that doesn't reduce humans to capital and doesn't set the goal of higher wages and greater social mobility as the end goal, however I felt the alternative isn't clearly defined and the authors' new definition seemed to be a broader form of human capital, rather than anything radically different
I also thought the book was lacking with regards to the sorting and signalling hypothesis of education
May 4, 2024
This book should be called Entitlement and Grievance Theory.
Displaying 1 - 5 of 5 reviews